It doesn’t take a new partnership with Walmart (NYSE:WMT) for me to really like Shopify (NYSE:SHOP) right now. In fact, SHOP stock had a top rating in my Portfolio Grader even before this week’s huge announcement.
And now everyone’s jumping on the Shopify bandwagon. If you’ve been following my column in recent weeks and subscribe to my Portfolio Grader, you’ve had a head start in knowing what’s coming into focus for everyone else now. Shopify’s stock is a screaming buy.
First, let’s get to the news that’s driving the stock higher right now.
Shopify’s New Partnership
In a blog post on June 15, Walmart said it was “joining forces” with Shopify to expand its Marketplace offerings and to bring more small business sellers onto is growing platform.
Walmart said it intends to add as many as 1,200 Shopify sales to its website before the end of 2020.
Jeff Clementz, vice president of Walmart Marketplace, said the partnership helps Walmart expand its focus to small- and medium-sized businesses:
“Shopify powers a dynamic portfolio of third-party sellers who are interested in growing their business through new, trusted channels. This integration will allow approved Shopify sellers to seamlessly list their items on Walmart.com, which gives Walmart customers access to a broader assortment … Shopify has a long history of helping small businesses leverage scale, and we’re proud to be part of the solution that is helping customers and other retailers.”
For Shopify, the partnership gives its users access to a growing platform that currently gets 294.5 million monthly visits. Walmart is the No. 3 ecommerce platform in the U.S., trailing only Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY).
SHOP stock jumped 8% after the announcement.
And don’t forget — this is only one of Shopify’s newest partnerships. Last month, Facebook (NASDAQ:FB) announced it would partner with Shopify and other e-commerce platforms to launch Facebook Shops, a new online shopping marketplace.
Shopify CEO Tobias Lutke said the Facebook partnership shows Shopify is “reducing the barriers to entrepreneurship and advancing the future of commerce.”
What This Means for Shopify
Walmart has been chasing Amazon’s retail dominance for a while, and making some decent inroads as it grows out its e-commerce offerings. And Amazon is also Shopify’s biggest competitor, as Jeff Bezos’ company enjoys more than 2 billion website visits per month.
Now Walmart and Shopify can take on the task of slaying the Amazon beast together.
Now take a look at the big picture — these kinds of partnerships and battles are the new reality of retail stocks. Gone are the days where brick-and-mortar retailers like Sears (OTCMKTS:SHLDQ), J.C. Penney (OTCMKTS:JCPNQ), Nordstrom (NYSE:JWN) and Macy’s (NYSE:M) sought retail supremacy.
Instead, e-commerce stocks such as Amazon, Shopify, Etsy (NASDAQ:ETSY) and retailers with mammoth e-commerce operations, such as Target (NYSE:TGT) and Walmart will dominate the retail space in the 21st century.
The novel coronavirus pandemic just hastened the demise of brick-and-mortar retailers and supercharged earnings for e-commerce powers. Shopify’s first-quarter revenues, for instance, rose 47% to $470 million. And that was in a period when the economy completely derailed thanks to Covid-19.
Shopify COO Harley Finkelstein said the shift to online commerce during the pandemic was fast: “The retail world that would have existed in the year 2030 has been pulled into 2020. Brick and mortar retailers that were thinking of moving online have done so at an incredible clip over the last 8-10 weeks.”
The Bottom Line for SHOP Stock
This is the time that Shopify shareholders have been banking on for years as Shopify’s stock grew into a powerhouse with a market cap approaching $100 billion.
Brick-and-mortar retailers are falling by the wayside and e-commerce companies are coming into their own. Shopify, now armed with partnerships with the nation’s largest retailer and the world’s largest social media network, is uniquely positioned to thrive in the new retail economy.
SHOP stock is up 108% so far this year. It’s a strong buy in my Portfolio Grader, where it has an ‘A’ rating right now.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.